Virginia advisor Joshua Ray Abernathy guaranteed clients annual returns of 10 to 20 per cent in stocks like Apple and Google. For six years the broker had his clients convinced he was delivering the goods.
However, it turns out that Abernathy was running an elaborate Ponzi scheme investing a small amount of client money in a personal E-trade account and spending the rest, estimated at $1.1 million.
Abernathy spent $216,000 renting high-end sports cars including a bright orange Lamborghini Gallardo. Living the lifestyle of the rich and famous was this advisor’s specialty.
“Through lies, deceit and a rented orange Lamborghini … defendant convinced seventeen people to trust him with their hard-earned retirement monies,” Assistant U.S. Attorney Melissa O’Boyle wrote in court documents. “They were hard-working individuals – some from his church – who wanted to invest funds in secure investments that would allow them to retire in a comfortable – not ostentatious – manner.”
Abernathy’s conspicuous consumption prompted questions from some of the clients, none of whom were wealthy and could afford to lose their money. The advisor’s actions included convincing some of the clients to cash in their IRA retirement accounts despite the substantial tax implications of doing so.
Although the advisor turned himself into the authorities, the Assistant U.S. Attorney believes his actions deserve serious punishment.
“Defendant spent these funds without the slightest hesitation, care or concern that he was spending his clients’ nest eggs and retirement funds,” said O’Boyle. “Such actions speak volumes about his character and warrant a substantial sentence.